Itochu targets Mongolian coal to expand trade

Itochu Corp., Japan’s fourth-largest trading company, has invested in Winsway Coking Coal Holdings Ltd. to secure coal from Mongolia, stepping up competition with China and Russia for the steelmaking ingredient as prices jump, says a report by Bloomberg.

Itochu joined a group led by Hopu Investment Management Co., the $2.5 billion fund run by Goldman Sachs Group Inc. partner Fang Fenglei, in investing in Winsway with the purchase of $10 million of convertible debt last month, Ken Tezuka, manager of the company’s coking coal section, said in an interview in Tokyo. Winsway, based in the British Virgin Islands, transports coal from Mongolia to China.

China Shenhua Energy Co. and Russia’s government-run ARMZ Uranium Holding are seeking access to coal and energy assets in Mongolia, the home of some of the largest undeveloped mineral resources in the world. Itochu wants to add Mongolian assets to its operations in Australia, Indonesia and North America as prices climbed to a near record this year.

“The current levels enable Mongolian coal to sufficiently compete against coal produced in other regions,” Tezuka said May 14. “Mongolian coal wasn’t viable to export when prices were around $30 and $40” a metric ton.

Winsway has expanded sales recently by investing in trucks to carry coal from mines in Mongolia, including one close to the $2 billion Tavan Tolgoi coal deposit, Tezuka said.

Mongolia’s coal exports to China may climb to about 12 million tons this year from 8.5 million tons in 2009, Alexander Molyneux, the chief executive officer of SouthGobi Energy Resources Ltd., said last month.

China bought about 4 million tons of coal in total from Mongolia in 2008 out of national production of 10 million tons, according to a March 18 statement released by Japan’s Ministry of Economy, Trade and Industry.

Mongolia will develop its biggest untapped uranium field in a venture with Russia. State-owned KOO MonAtom will hold at least 51 percent in a venture with ARMZ Uranium and possible partners from Japan or China, Bayarbayasgalan Tudevbazar, nuclear materials chief of Mongolia’s Nuclear Energy Agency, said last month.

SouthGobi halts plan to build rail link to China border

SouthGobi Resources has halted its plans to build a rail link between its pit in southern Mongolia and the Chinese border because of uncertainty over government policy. Instead, it will concentrate on upgrading a road link in the deserts to the border.

CEO Alexander Molyneux said the Mongolian government is reviewing the nation’s entire railways policy, and “given the question marks over the policy, we decided to suspend work on the rail link”. SouthGobi had earmarked $150 million to develop rail and road links near its Ovoot Tolgoi mine.

Source: http://www.news.mn

Stock exchange to be restructured under contract

The Government yesterday approved draft proposals on selecting a management team to restructure the operating procedures of the Mongolian Stock Exchange (MSE). They have been forwarded to the State Property Committee for beginning the tender process of selection.

The bidders have to be a legal entity or a consortium of such entities. Members of the administrative team must have experience of working in the securities and capital market, especially in countries that have made the transition to a market economy in the recent past and that still do not have a comprehensive securities market environment in place.

A bidder will have to submit a detailed 3-year business plan to cover four principal areas: Facilitating a sustainable securities market; facilitating efficient operation of the securities market; establishment of a fair market; and protecting investors’ interest.

The State Property Committee has been asked to complete the competitive selection process within 3 months. There will be no dilution of state ownership, and the management team will run the MSE on the basis of an administrative contract.

Cash Minerals to buy uranium properties in Mongolia

Cash Minerals Ltd has entered into a Heads of Agreement with East Asia Minerals Corporation to purchase a 100% interest in EAM Exploration LLC, a wholly owned subsidiary of East Asia that owns a portfolio of very prospective uranium properties inMongolia.

The project portfolio includes seven properties, Ulaan Nuur, Ingenii, Enger Ar, Sevsul Bulag, Hutul, Unegt and Bukht Uul, totaling approximately 155,500ha. Three of the properties, Ingenii, Ulaan Nuur, and Enger Ar have historic Soviet uranium resources totaling approximately 25 million pounds of uranium. Drilling by East Asia in 2006 and 2007 confirmed the presence and grades of historical uranium intersections. Mineralization is open and there is good potential to expand the mineralized zones and delineate resources which are likely to be amenable to In-Situ-Recovery.

Cash Minerals will pay to East Asia US$2,000,000 in cash upon signature of the Definitive Agreement and issue East Asia that number of common shares equal in value to US$1,000,000 to be determined upon the date of entering into the Agreement. The company will grant a 1.5% Net Smelter Royalty to East Asia on all properties; a previously existing 1.5% NSR applies to the Enger Ar property.

Mongolia to decide soon on uranium JV with Russia

The Government of Mongolia could soon decide on establishing a joint venture with Russia to develop a Mongolian uranium deposit, the head of the Russian civilian nuclear power corporation, Rosatom, said on Tuesday. At a meeting with Russian Prime Minister Vladimir Putin in the Black Sea resort of Sochi, Sergei Kiriyenko said that Russia had signed an intergovernmental deal on the uranium joint venture early in 2009 but the project stalled due to the change of government in Mongolia. 

"Already after the election, we signed an agreement with the new government and in January signed a specific protocol. The government of Mongolia has made a decision on the Dornod-uranium deposit. This deposit is in the ownership of the government of Mongolia," Kiriyenko said. He added that Russia had transferred all the constituent documents on the joint venture to the Mongolian side and the secretary of the Mongolian Security Council has confirmed to Rosatom that a final decision on contributing the deposit to the joint venture would be made soon.

Kiriyenko said work on the deposit could be launched quickly as the deposit was located 300 km (186 miles) from Russia"s neighboring Chita Region where a mining enterprise was situated and whose specialists and equipment could be used in the uranium deposit development.

Rosatom increased production of uranium by 25% in 2009 and has set the task of increasing uranium output by at least 11% in 2010, Kiriyenko said.